Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. L-51377 June 27, 1988
INVESTMENT & DEVELOPMENT, INC., petitioner,
vs.
COURT OF APPEALS, RAYMUNDO GATPAYAT, AGENCIA DE EMPENOS DE AGUIRRE, and AGUIRRE INCORPORATED, respondents.
Carlos J. Paras and Aloysius E. Dichoso for petitioner.
Jose M. Macahasa for respondent Raymundo Gatpayat.
Angelito M. Chua for respondent Aguirre, Inc.

GUTIERREZ, JR., J.:

This petition seeks a modification of the decision of the Court of Appeals which affirmed in toto that of the Court of Agrarian Relations, Seventh Regional
District, Branch I, Pasig, Rizal insofar as the complaint against Raymundo Gatpayat was ordered dismissed.

The facts of the case are not disputed.

On January 14,1965, private respondent Raymundo Gatpayat sold the land subject matter of this case to petitioner Investment and Development, Inc.
(IDI) for P122,769.50 payable in three installments of P36,830.85, P24,533.90 and P61,384.75, the last amount to be paid within one year from and after
the date of issuance of the Original Certificate of Title over the property which respondent Gatpayat obligated himself to secure. On February 20, 1966,
Original Certificate of Title No. 5019 was issued in the name of respondent Gatpayat. On January 30,1967, Transfer Certificate of Title No. 180376 was
issued in Investment and Development, Inc.'s name.

The subject land is agricultural with an area of three-and-a-half hectares, more or less, located in Talon, Las Piñas Rizal. Originally, the land was owned
by one Francisca Tolentino. It had Sotero Domingo Ramirez as tenant. When old age ensued, Sotero asked for his replacement in the person of his son,
Jose Ramirez.

In 1964, respondent Gatpayat bought the land from the original owner on the condition that the annual rental of ten cavans of palay given by tenant
Ramirez would pertain to Gatpayat only after full payment of the purchase price. Subsequently, respondent Gatpayat completed his payments for the
land and entered into an agreement with tenant Ramirez that the latter shall sell the ten cavans of palay and give the proceeds to him.

On March 8, 1971, the petitioner sold the land to respondent Agencia de Empenos de A. Aguirre, Inc. for the amount of P456,001.60. As a result thereof,
Transfer Certificate of Title No. 317815 was issued in the vendee's name. On April 6,1973, Transfer Certificate of Title No. 403109 was issued in the
name of the present owner, respondent A. Aguirre, Inc.

In April 1972, tenant Ramirez was forced to stop cultivating the land in question because of the bulldozing caused by respondent A. Aguirre, Inc.

In a complaint filed by tenant Ramirez against the petitioner and the private respondent, payment for disturbance compensation was prayed for as a
consequence of the bulldozing of the land. The petitioner, in turn filed a crossclaim against respondent Gatpayat in case of a judgment adverse to it
while respondents Agencia and Aguirre, Inc. filed a cross-claim against the petitioner.

After the case was submitted for decision, the agrarian court rendered a decision in favor of tenant Ramirez with the following dispositive portion, to wit:

FOR ALL THE FOREGOING CONSIDERATIONS judgment is hereby rendered in the tenor the disposition herein below provided:

1. Declaring plaintiff Jose Ramirez as the true and lawful agricultural tenant of Raymundo Gatpayat over the landholding in question
with an approximate area of 35,077 square meters situated at Talon, Las Piñas Metro Manila and presently owned by defendant A.
Aguirre, Inc.;

2. Ordering defendant A. Aguirre, Inc. to pay and deliver plaintiff the amount of P24,500.00 as payment for disturbance
compensation;

3. Ordering A. Aguirre, Inc. to pay plaintiff P2,000.00 as attorney's fees;

4. Ordering Investment and Development Inc. to pay A. Aguirre, Inc. the amount of P24,000.00 as damages;

5. Ordering Investment and Development Inc. to pay A. Aguirre, Inc. P2,000.00 as attorney's fees;

6. Dismissing the complaint against defendant Raymundo Gatpayat;

7. Dismissing plaintiffs claim for moral and exemplary damages for insufficiency of evidence; and

8. Dismissing the claim of A. Aguirre, Inc. for moral and exemplary damages against Investment and Development, Inc.
 IT IS SO ORDERED. (pp. 11-12, Rollo)

From the above decision, only the petitioner appealed to the Court of Appeals alleging, among others, that respondent Gatpayat should have been liable
to it considering that he violated his warranty "that the land is free from all liens and encumbrances;" that the agrarian court erred in declaring that tenant
Ramirez was an agricultural lessee of petitioner; and that the court's ruling was contrary to law, equity and fair play in that it caused unjust enrichment on
the part of respondent Gatpayat by ordering the payment of disturbance compensation at petitioner's expense.

On June 14, 1979, the Court of Appeals promulgated a decision affirming the agrarian court in all respects based on the following grounds:

The warranty made by IDI in the "Deed of Absolute Sale" in favor of Agencia dated March 8, 1971, it provides among others that the
property is "free from all liens, adverse claim, encumbrances, claims of any tenant and/or agricultural workers, either arising as
compensation for disturbance or from improvements" including compliance 'with all the requirements for the provisions of the
Tenancy Law, the Land Reform Code and other pertinent laws of the Republic of the Philippines ..." With the findings that plaintiff is
a true and lawful tenant and under the above-mentioned warranties, IDI should, therefore, be held liable for the same. Hence, the
counterclaim of Agencia and Aguirre against IDI is proper and compensable." (pp. 15-16, Rollo)

The warranty made by Gatpayat in favor of the IdI, as contained in the "Deed of Absolute Sale" duly executed on January 30, 1967
(Exhibit "2," IDI; Exhibit "2," Gatpayat and Exhibit "5," Aguirre) states that the property was 'free from all liens and encumbrances." In
Civil law and as used and understood in ordinary legal parlance, a lien and/or encumbrance is synonymous to 'gravamen, "carga,
"hypoteca" or 'Privilegium' and does not cover tenancy. In other words, unless so specifically stated, tenancy cannot be considered
a lien or encumbrance. In the absence of such a showing, and inasmuch as Gatpayat did not warrant the existence of tenancy, he
cannot be held liable for violation of his warranty. (p. 16, Rollo)

Since the leasehold relationship between the plaintiff and Gatpayat has been established on the land in question, the same cannot
be terminated by the sale of the land to the appellant (IDI). ... This is the underlying principle of security of tenure of the leaseholder
enshrined in our agrarian laws." (p. 18-19, Rollo)

The petitioner appealed to this Court by way of certiorari with a lone assignment of error that reads:

THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT RESPONDENT RAYMUNDO GATPAYAT WAS
LIABLE TO PETITIONER FOR BREACH OF SELLER'S WARRANTY UNDER ARTICLE 1547 (2) IN RELATION TO ARTICLE 18
OF THE CIVIL CODE. (p. 1, Petitioner's Brief)

The only issue presented in this petition is whether or not respondent Gatpayat as seller of the land in question violated his warranty to the petitioner
which bought the land "free from all liens and encumbrances."

The petitioner no longer questions the finding of the appellate court that tenant Ramirez is entitled to a disturbance compensation. It only maintains that
reimbursement by respondent Gatpayat of said compensation in its favor should be ordered because the tenancy relationship between respondent
Gatpayat and tenant Ramirez falls under the term "hidden faults or defects" which respondent Gatpayat warranted against in the sale of the land to the
petitioner by virtue of Article 1547, sub-paragraph (2) of the Civil Code.

We find no merit in the petitioner's position.

It is axiomatic that factual findings of the Court of Appeals are conclusive on the parties and reviewable by us only when the case falls within any of the
recognized exceptions which is not the situation obtaining in this petition (See Chua Giok Ong v. Court of Appeals, 149 SCRA 115; Dulos Realty and
Development Corporation v. Court of Appeals, et al., G.R. No. 76668 promulgated on January 28, 1988). The appellate court in affirming the lower
court's decision, has clearly dissected the facts and analyzed the phraseologies of the warranties contained in the contract between respondent
Gatpayat and petitioner petitioner, on the one hand, and petitioner and respondent Agencia de Empenos de Aguirre, on the other. We agree with the
disparity in the terms used and its consequent effects as pointed out in the questioned decision.

The petitioner does not dispute the fact that the Deed of Absolute Sale which it executed with Gatpayat simply warranted that the subject land was "free
from all liens and encumbrances." Neither does the petitioner deny that to its buyer, respondent Agencia de Empenos de Aquirre, it warranted that the
land was "free from all liens, adverse claims, encumbrances, claims of any tenant and/or agricultural workers, either arising as compensation for
disturbance or from improvements." The distinction in the phraseology is not an idle one.

We have held in the case of Pilar Development Corporation v. Intermediate Appellate Court (146 SCRA 215), that:

When the facts are undisputed, the question of whether or not the conclusion drawn therefrom by the Court of Appeals is correct, is
a question of law cognizable by the Supreme Court (Comments on the Rules of Court, Moran 1979 Edition, Vol. II, p. 474 citing the
case of Commissioner of Immigration v. Garcia, L-28082, June 28, 1974).

However, all doubts, as to the correctness of such conclusions will be resolved in favor of the Court of Appeals (Id.), citing the case
of Luna v. Linatoc, 74 Phil. 15.

The reimbursement of the payment for disturbance compensation by the petitioner to respondent Agencia de Empenos de Aguirre is clearly based on an
express warranty as can be gleaned from the specific wordings of the contract between them. The petitioner cannot claim reimbursement from its seller,
respondent Gatpayat, on the basis of an implied warranty against hidden faults or defects under Article 1547, sub-paragraph (2) inasmuch as the term
"hidden faults or defects" pertains only to those that make the object of the sale unfit for the use for which it was intended at the time of the sale. In the
case at bar, since the object of the sale by Gatpayat to the petitioner is an agricultural land, the existing tenancy relationship with respect to the land
cannot be a "hidden fault or defect." It is not a lien or encumbrance that the vendor warranted did not exist at the time of the sale. It is a relation-ship
which any buyer of agricultural land should reasonably expect to be present and which it is its duty to specifically look into and provide for. Agenda saw
to it that the warranty was specific when it, in turn, purchased the land.

WHEREFORE, PREMISES CONSIDERED, the instant petition is DENIED for lack of merit. The decision appealed from is hereby AFFIRMED. Costs
against the petitioner.

SO ORDERED

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-17150 June 20, 1922
ANDRES SOLER, plaintiff-appellee,
vs.
EDWARD CHESLEY, defendant-appellant.
Kincaid, Perkins and Kincaid for appellant.
Recto and Casal and Angel Roco for appellee.
ROMUALDEZ, J.:

The plaintiff had agreed with Wm. H. Anderson and Co., for the purchase of certain machinery, as evidenced by the document Exhibit A, of which the
following is an exact copy:

This agreement made and entered into by and between Wm. H. Anderson and Co., party of the first part, and Andres Soler, party of the
second part, Witnesseth:

The party of the first part hereby agrees to deliver to the party of the second part the herein described coconut oil machinery which was
ordered by cable by the party of the first part on March 4, 1918, and the party of the second part agrees to purchase the said machinery from
the party of the first part on the terms and conditions given below:

1. 4 Anderson oil expellers No. 1, side drive complete with stationary strainer, and fitted with a 15-h. p. motor, the same mounted on a special
base on the expeller and connected to the expeller by a suitable silent chain drive.

2. 4 Rotary pumps (oil) attached to and driven from expeller.

3. Sufficient 6" and 9" metal conveyor, etc., for the 4 expellers to make complete conveyor line with supports for securing to expeller.

4. 1 Vertical triplex pump, 2 ½" x 4", 1 ½ suction and discharge, capacity 12 gallons per minute, belt drive.

5. 1 Bauer ball-bearing motor-driven attrition mill, 22", fitted with 2 15-h. p. electric motors, 220 volt, 2 phase, 60 cycle, direct-connected and
complete with automatic starter,

6. 1 Shriver filter press, 30", 36 plates, complete with one extra set of filter cloths.

7. 1 Buckeys cooker, 62", 3 high, direct-connected by silent chain drive to a 15-h. p., 220 volt, 2 phase, 60 cycle, alternating current motor.

8. Sufficient meters of standard chain elevator, etc.

Terms and conditions: The foregoing machinery is to be invoiced at manufacturers' price, plus all charges such as freight, insurance, interest
and exchange, arrastre, landing charges, delivery, internal revenue, etc., plus a buying commission of 5 per cent.

The terms of payment are fifty per cent (50%) deposit to be made upon arrival of the machinery, and the balance ninety (90) days after
delivery of the machinery.

In the event that the party of the second part shall fail to live up to the terms of this agreement, such failure by the party of the second part will
be sufficient cause to terminate this contract, and any payments made by the party of the second part under and by virtue of this contract shall
be and remain the exclusive property of the party of the first part. The title of the machinery in question is to remain in the name of the party of
the first part until payment in full has been made, at which time transfer of all right and title to the above mentioned machinery will be made to
the party of the second part.

This agreement is contingent upon strikes, fire, accidents, extraordinary shipping and other conditions imposed on account of war and other
causes unavoidable or beyond the control of the party of the first part.

It is strictly understood that the quotations made to Mr. Andres Soler under date of February 27, 1919, were approximated and were subject to
change without notice. We can therefore make no guarantee as to prices and delivery, it being understood that prices charged will be those
shown on the invoices of the manufacturers, and shipment will be made by first possible opportunity.
 Dated Manila, P.I., March ___, 1918.

(Sgd.) WM. H. ANDERSON and CO.,

By P. A. THOMPSON,
Party of the first part.
(Sgd.) ANDRES SOLER,
Party of the second part.

Witness:

(Sgd.) W. JENUDE,
FERNANDO COUTME

On November 16, 1918, the plaintiff sold the defendant all his rights and interest in the aforesaid contract of sale, the document executed to that end,
Exhibit B, being as follows:

This agreement made in Manila, Philippine Islands, by and between Mr. Andres Soler, of age, and resident of the municipality of Naga,
Province of Ambos Camarines, party of the first part; and Mr. Edward Chesley, of age, and resident of this city of Manila, party of the second
part, . . .

WITNESSETH

First. That Mr. Andres Soler has an agreement in due form with Messers. Wm. H. Anderson and Co. for the purchase of a coconut oil
machinery, more particularly described in the said agreement as follows: * * *.

1. 4 Anderson oil expellers No. 1, side drive complete with stationary strainer, and fitted with the 15-h. p. motor, the same mounted on a
special base on the expeller and connected to the expeller by a suitable silent chain drive, * * *.

2. 4 Rotary pumps (oil) attached to and driven from expeller . . . .

3. Sufficient 6" and 9" metal conveyor, etc., for the 4 expellers to make complete conveyor line with supports for securing to expeller * * *.

4. 1 Vertical triplex pump, 2 ½ x 4", 1 ½" suction and discharge, capacity 12 gallons per minute, belt drive * * *.

5. 1 Bauer ball-bearing motor-driven attrition mill, 22" fitted with 2 15-h. p. electric motors, 220 volt, 2 phase, 60 cycle, direct-connected and
complete with automatic starter * * *.

6. 1 Shriver filter press, 30", 36 plates, complete with one extra set of filter cloths * * *.

7. 1 Buckeys cooker, 62", 3 high, direct-connected by silent chain drive to a 15-h. p., 220 volt, 2 phase, 60 cycle, alternating current motor * *
*.

8. Sufficient meters of standard chain elevator, etc., * * *.

Second. That a part of the aforesaid machinery is at this time on the way, the other part being already in this city of Manila, the price of which
has not as yet been paid by Mr. Soler to Messrs. Wm. H. Anderson and Co. * * *.

Third. That being interested in acquiring the aforesaid machinery, Mr. Edward Chesley has made Mr. Soler a proposition whereby the latter
should transfer it to him, and he should assume the obligation to pay Messrs. Wm. H. Anderson and Co. the amount of the invoices thereof,
Mr. Soler to be relieved from his contract with Messrs. Wm. H. Anderson and Co., which proposition has been agreed to as hereinbelow set
forth, and to have an evidence of the agreement this contract is made and entered into by them in the following terms and conditions:

(a) Mr. Andres Soler conveys and transfers to Mr. Edward Chesley all the rights and interest which he may have in his agreement with Messrs.
Wm. H. Anderson and Co. for the purchase of the oil machinery, more particularly described in the first paragraph hereof; Mr. Chesley being
subrogated, therefore, to whatever rights and obligations Mr. Soler may have acquired and contracted under the aforesaid agreement. * * *.

(b) This sale of the said machinery is for the price of one hundred thousand pesos, Philippine currency, the same to be paid by Mr. Chesley by
paying Messrs. Wm. H. Anderson and Co. the amount of the invoices of said machinery, and Mr. Andres Soler the difference which may be
found to exist between the amount of said invoices and the above mentioned sum of one hundred thousand pesos, said payment to be
secured by a personal or corporation bond to the satisfaction of Mr. Soler. * * *.

(c) In subrogating himself to the right and obligations which Mr. Soler may have under his agreement with Messrs. Wm. H. Anderson and Co.
for the purchase of the aforesaid machinery, Mr. Chesley relieves Mr. Soler from whatever obligation he has, or may have, under the aforesaid
agreement with Wm. H. Anderson and Co., concerning the machinery hereinbefore more particularly described. * * *.
 (d) Messrs. Soler and Chesley declare that Messrs. Wm. H. Anderson and Co. have actual knowledge of this sale of the machinery, as well as
of Mr. Chesley being subrogated to the rights and obligations created by the agreement entered into by and between Mr. Soler and Messrs.
Wm. H. Anderson and Co., the latter being in absolute conformity therewith. * * *.

And (e) Mr. Chesley shall pay Mr. Soler the difference which may be found to exist between the amount of the invoices of the machinery and
the sum of one hundred thousand pesos immediately upon the arrival of said machinery at this city of Manila; provided that if any part of the
machinery not affecting the expellers is found lacking, a proportional deduction shall be made from the amount which Mr. Soler may have
received from Mr. Chesley. * * *.

And fourth. That Messrs. Soler and Chesley solemnly make and enter into this contract on the terms and conditions hereinbefore set forth. * *
*.

In testimony whereof, the parties have hereunto set their hands at Manila, this sixteenth day of November, nineteen hundred and eighteen.

(Sgd.) ED. CHESLEY.

(Sgd.) ANDRES SOLER.

Signed in the presence of:

(Sgd.) MANUEL SANSANO.

P. BLANC.

UNITED STATES OF AMERICA

CITY OF MANILA, PHILIPPINE ISLANDS

At the city of Manila, Philippine Islands, this 16th day of November 1918, before me, Enrique Barrera y Caldes, notary public in and for the said city,
personally appeared Mr. Andres Soler and Mr. Edward Chesley known to me to be the persons who executed the foregoing instrument, and
acknowledged that the same is their free act and deed. They exhibited their cedulas Nos. 220440 and 2074, issued at the municipality of Naga, Province
of Ambos Camarines and at this city of Manila on the 2d and 3d of January, 1918, respectively.

This document is No. 526 of my notarial register, and is entered • on page 4 of said register.

Before me,

DON ENRIQUE BARRERA Y CALDES,

Notary Public.
My commission expires December 31, 1918.

Notarial seal.

I, manager of the firm of Anderson and Co., am agreeable to the transfer of the machinery which Mr. Soler has purchased through our firm on the
conditions stipulated in our contract.

WM. H. ANDERSON AND CO.,

By ---------------------
Vice-President.

Of the parts of the machinery covered by these contracts, only the "filter press," the "cooker" and the "chains" were in Manila on November 16, 1918, the
date of Exhibit B, but the most important parts, such as the "oil expellers" and the "grinding mills" were not then yet in this city.

These "oil expellers" were shipped for Manila on the 12th of December, 1918, the motors on the 8th of January, 1919, the machinery on the 16th of
January 1919 and the grinding mills on the 21st of February, 1919, all of which arrived at Manila on February 13, March 8, April 27, and August 23,
1919, respectively.

These effects were received and paid for by the defendant under protest, on account of the fact that they were not delivered within the period stipulates
in the contract.

On April 25, 1919, the defendant's attorney-in-fact, Fred A. Leas, through Attorney Francisco A. Delgado, wrote the plaintiff the letter, Exhibit 2, advising
him that he contract above referred to was rescinded, it appearing that the parts of the machinery, which the plaintiff asserted in said contract were on
the way, were not at the time and it was only several days later that they were shipped for Manila. In this letter the parts received were placed at the
plaintiff's disposal upon the repayment of the sums advanced by the defendant to Messrs. Anderson and Co.

On the 14th of October, 1919, the plaintiff commenced this action in which, basing himself on the contract Exhibit B and on the facts set forth in his
complaint, he prayed that the defendant be sentenced to pay him the sum of P30,546.03 with interest thereon, which sum was the difference between
the P100,000, the consideration of the contract, Exhibit B, and the price of the aforesaid machinery which had been paid by the defendant, plus the
incidental expenses, as stipulated in the said contract.

The defendant answered, denying generally and specifically the allegations of the complaint and setting up a special defense and a counterclaim. In his
special defense, he alleges that he had accepted and signed the contract Exhibit B on the assertion therein contained that of the machinery, which was
the subject matter of the said contract, a part was already in Manila, and the other part on the way, and also on the promises, assertions, and
contemporary and previous acts of the plaintiff to the same effect, by means of which the latter succeeded in inducing the defendant to make and sign
the aforesaid contract; that the parts of the machinery which, on the date of the contract, were said to be on the way, were not in fact in, and did not
arrive at, Manila but long thereafter; that if he signed the contract, it was because he was desirous of having the machinery, and the defendant assured
him that it would be delivered to him, immediately or within a short time; that otherwise he would not have signed the contract; that the prepared in a
shed the necessary compartments to install the machinery on or before the 1st day of January, 1919; that on April 25, 1919, he advised the plaintiff that
he regarded the contract as rescinded; that he had complied with his part of the contract, having paid Messrs. Anderson and Co. the sum of P69,453.97;
that he suffered damages in the sum of P120,000.

In his counterclaim, the defendant alleges that the giving of a bond in favor of plaintiff being one of the conditions of the contract, he (the defendant)
gave such bond, having paid the Philippine Guaranty Co. a premium of P400 for the quarter beginning with November 16, 1918.

The defendant prays in his answer that he be absolved from the complaint, the aforesaid contract declared rescinded, and the plaintiff compelled to
receive the machinery in question, to pay the defendant P69,453.97, and be sentenced to pay P120,000 as damages.

Trial having been held, the lower court sentenced the defendant to pay the plaintiff P30,546.03, with legal interest thereon from October 16, 1919, and
the costs, and absolved the plaintiff from the set-off and the counterclaim.

From this judgment the defendant has appealed to this court, making the following assignments of error:

1. The trial court erred in not holding that time was an essential element of the contract Exhibit B.

2. The trial court erred in giving judgment in favor of the plaintiff, and

3. The trial court erred in dismissing the counterclaim of the defendant.

The defendant, testifying as witness, said that he had asked the plaintiff and his broker, Mr. Bank, whether at that time the machinery had already left the
factory, and that they answered yes. True, the plaintiff denies in his testimony having made such a statement, but Mr. Blanc does not deny it, and it is a
fact that in the contract in question was inserted the following:

Second. That a part of the aforesaid machinery is at this time on the way, the other part being already in this city of Manila, the price of which
has not as yet been paid by Mr. Soler to Messrs. Wm. H. Anderson and Co.

It appears sufficiently established in the record that if the plaintiff gave his consent to this contract, it was because he expected that said machinery
would arrive within a short time, — the time reasonably necessary for such machinery to reach Manila from America, — as the plaintiff asserted in the
document itself that said machinery was then on the way. The act of the defendant in insisting that this guaranty as to the arrival of the machinery be
stated in the contract, his repeated complaints and protests when he afterwards made payments as the parts arrived, and his letter of April 25, 1919,
leave no room for doubt that the arrival of said machinery within a reasonably short time was one of the determining elements of his consent. These acts
of the defendant disclose the fact that he intented the arrival of the machinery to be an essential element of the contract (art. 1282, Civil Code). We hold
that in the case at bar the arrival of the machinery within a reasonable time was an essential element of the contract, such time to be determined by
taking into account the fact that is was then on the way to Manila.

The defendant had no reason to doubt the veracity of the plaintiff's assertion that said machinery was then on the way. The plaintiff himself testified that
he had showed the letters, copies of which are Exhibits X, Y, and Z, in the last of which Messrs. Anderson and Co. stated that according to the
information received, the expellers had already been sent out by the manufacturers.

The fact that the plaintiff had no control of the prompt transportation of the said machinery to Manila, does not relieve the plaintiff from making good the
guaranty inserted in the contract that said machinery was already on the way to Manila. The plaintiff elected to bind himself in that way, although he
knew, as he ought to have known that, had his rights not been transferred to the defendant, he could not have charged Messrs. Anderson and Co. so
much, who in the contract Exhibit A did not guarantee the delivery nor the amount of the price. The plaintiff having bound himself in favor of the
defendant for more than what Messrs. Anderson and Co. had bound themselves for in hi favor, we entertain no doubt that he acted in good faith,
encouraged by the information of Messrs. Anderson and Co. (although the most that the expellers, — only the expellers, — had been sent out by the
factory), but it was he, not Messrs. Anderson and Co., who contracted the obligation, and, therefore, he is the only one to be responsible for the
obligation arising from the contract. He who contracts and assumes an obligation is presumed to know the circumstances under which said obligation
can be complied with (Ferrer vs. Ignacio, 39 Phil., 446).

It cannot be said that such a statement of the plaintiff that the machinery was on the way is not one of the conditions of the contract Exhibit B. It is true
that it is only in the third paragraph of the said contract that the terms and conditions were thereof are set out in detail, but such terms and conditions
were stipulated upon the understanding that the machinery is that described in the first paragraph of the contract and that a part thereof was already in
Manila and the other part on the way.

True, the plaintiff id not specify the date or time of the arrival of said mechanical devices; but he did assert that they were on the way on the date of the
contract, that is, the 16th of November, 1918, which is tantamount to saying that they would arrive early in January, 1919, under normal condition, taking
into account that the expellers, which were shipped on December 12, 1918, arrived at Manila on February 13, 1919. But it did not happen as asserted,
the last parts of the machinery, to wit, the grinding mills not having arrived at Manila until the 23rd of August, 1919, they not having been shipped until as
late as the 21st of February of that year.

Clause (c) of the third paragraph of the contract Exhibit B, discharged the plaintiff from all the obligations contracted by him under the agreement Exhibit
A made with Messrs. Anderson and Co., relative to the payment of the price of the machinery; buy him under the contract Exhibit B, for he has no such
an obligation cannot be that referred to in clause (c) of the third paragraph of Exhibit A, but Messrs. Anderson and Co.

We find that the plaintiff has failed to carry out his obligation incurred under the second paragraph of the contract. Exhibit B, and has, therefore, no right
to compel the defendant to comply with his obligation to pay the plaintiff the sum claimed in the complaint (art. 1124, Civil Code).

With regard to the counterclaim set up by the defendant, it appears from the record that he sold the aforesaid machinery to a third person, the Philippine
Refining Co. In cases like this, the rescission of the contract does not lie (art. 1295, Civil Code).

As to the damages claimed by the defendant, we find that the evidence adduced on this point is insufficient to fix the true amount thereof.

The judgement appealed from is reversed, and the defendant absolved from the complaint, and the plaintiff from the counterclaim and other claims of
the defendant without special pronouncement as to costs. So ordered.

Araullo, C.J., Malcolm, Villamor, Ostrand and Johns, JJ., concur.